Opinion
Case No. 19-CV-249-F
2020-10-16
BALFOUR BEATTY INFRASTRUCTURE INC., Plaintiff, v. AMERICAN TRACK GENERATIONS LLC, Jeff Wass, and Steven Gorton, Defendants.
Brian Shenker, Pro Hac Vice, David S. Greenhaus, Pro Hac Vice, Jackson Lewis PC, Melville, NY, Mistee Lyn Elliott, Timothy Michael Stubson, Crowley Fleck PLLP, Casper, WY, for Plaintiff. Christine Annette Gilbert Stickley, Lance E. Shurtleff, Gordon Rees Scully Mansukhani LLP, Denver, CO, Jason Stiehl, Pro Hac Vice, Robin V. Waters, Pro Hac Vice, Loeb & Loeb LLP, Chicago, IL, for Defendant American Track Generations LLC. Christine Annette Gilbert Stickley, Lance E. Shurtleff, Gordon Rees Scully Mansukhani LLP, Denver, CO, for Defendants Jeff Wass, Steven Gorton.
Brian Shenker, Pro Hac Vice, David S. Greenhaus, Pro Hac Vice, Jackson Lewis PC, Melville, NY, Mistee Lyn Elliott, Timothy Michael Stubson, Crowley Fleck PLLP, Casper, WY, for Plaintiff.
Christine Annette Gilbert Stickley, Lance E. Shurtleff, Gordon Rees Scully Mansukhani LLP, Denver, CO, Jason Stiehl, Pro Hac Vice, Robin V. Waters, Pro Hac Vice, Loeb & Loeb LLP, Chicago, IL, for Defendant American Track Generations LLC.
Christine Annette Gilbert Stickley, Lance E. Shurtleff, Gordon Rees Scully Mansukhani LLP, Denver, CO, for Defendants Jeff Wass, Steven Gorton.
ORDER ON DEFENDANTS' MOTION TO DISMISS AMENDED COMPLAINT
NANCY D. FREUDENTHAL, UNITED STATES DISTRICT JUDGE
Defendants American Track Generations LLC ("ATG"), Jeff Wass and Steven Gorton move to dismiss the seven-count Amended Complaint (ECF No. 20) of Plaintiff Balfour Beatty Infrastructure Inc. ("Plaintiff") for failure to state a claim for relief under Federal Rule of Civil Procedure 12(b)(6). ECF Nos. 21-22. Plaintiff opposes the motion as to all claims. As follows, the Court denies the motion. I. Background
The Amended Complaint appears to contain all of the fact allegations noted in the Court's order granting in part Defendants' motion to dismiss the original complaint. The Court will not repeat those allegations here. In the amended pleading, Plaintiff adds several allegations regarding how each of the Defendants has allegedly misappropriated its trade secrets from its division known as Balfour Beatty Rail ("BB Rail"). See, e.g. , Amended Complaint ¶¶ 20, 60-69. The amendment also drops Plaintiff's two claims for breach of the duty of good faith.
II. Standards for Rule 12(b)(6) Motions
As stated in the Court's order on Defendants' first motion to dismiss, Rule 12(b)(6) motions for dismissal must take into account the notice pleading standard of Rule 8 (or Rule 9, if pleading special matters). " Federal Rule of Civil Procedure 8(a)(2) requires only ‘a short and plain statement of the claim showing that the pleader is entitled to relief.’ Specific facts are not necessary; the statement need only ‘give the defendant fair notice of what the ... claim is and the grounds upon which it rests.’ " Erickson v. Pardus , 551 U.S. 89, 93, 127 S.Ct. 2197, 167 L.Ed.2d 1081 (2007) (quoting Bell Atl. Corp. v. Twombly , 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). "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, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Twombly , 550 U.S. at 570, 127 S.Ct. 1955 ). "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 678, 129 S.Ct. 1937. This is "a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Id. at 679, 129 S.Ct. 1937.
The court "must accept as true all well-pleaded facts, as distinguished from conclusory allegations, and those facts must be viewed in the light most favorable to the non-moving party." Moss v. Kopp , 559 F.3d 1155, 1161 (10th Cir. 2009). But "dismissal is appropriate where ‘the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct.’ " Al–Owhali v. Holder , 687 F.3d 1236, 1240 (10th Cir. 2012) (quoting Iqbal , 556 U.S. at 679, 129 S.Ct. 1937 ). "Factual allegations must be enough to raise a right to relief above the speculative level." Twombly , 550 U.S. at 555, 127 S.Ct. 1955. "Thus, mere ‘labels and conclusions’ and ‘a formulaic recitation of the elements of a cause of action’ will not suffice." Khalik v. United Air Lines , 671 F.3d 1188, 1191 (10th Cir. 2012) (quoting Twombly , 550 U.S. at 555, 127 S.Ct. 1955 ). But "a well-pleaded complaint may proceed even if it strikes a savvy judge that actual proof of the facts alleged is improbable and that a recovery is very remote and unlikely." Twombly , 550 U.S. at 556, 127 S.Ct. 1955.
III. Analysis
Because the Court's jurisdiction hinges upon the Defense of Trade Secrets Act claim, the Court again begins its analysis there.
A. Claim III Under 18 U.S.C. § 1836, Defense of Trade Secrets Act, and Claim IV for Misappropriation of Trade Secrets Under State Law
Plaintiff claims each of the Defendants violated 18 U.S.C. § 1836 by misappropriating trade secrets. "An owner of a trade secret that is misappropriated may bring a civil action under this subsection if the trade secret is related to a product or service used in, or intended for use in, interstate or foreign commerce." 18 U.S.C. § 1836(b)(1). The statute defines what information may constitute a "trade secret" in detail; essentially it "is information that derives economic value from not being generally known that is subject to reasonable measures of secrecy by it[s] owners." Select Energy Servs., Inc. v. Mammoth Energy Servs., Inc. , No. CIV-19-28-R, 2019 WL 1434586, at *2 (W.D. Okla. Mar. 29, 2019) (citing 18 U.S.C. § 1839(3) ). The statute defines misappropriation as:
(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; or
(iii) before a material change of the position of the person, knew or had reason to know that—
(I) the trade secret was a trade secret; and
(II) knowledge of the trade secret had been acquired by accident or mistake[.]
18 U.S.C. § 1839(5). Thus, misappropriation is the acquisition, disclosure or use of a trade secret with knowledge or reason to know it is unauthorized. Id. § 1839(5).
In this case, Defendants argue the Amended Complaint fails to state a DTSA claim because it does not adequately allege BB Rail had any trade secrets or that ATG used any of those trade secrets. The Court is not persuaded. As to Plaintiff's allegations of trade secrets, the Amended Complaint spells out in detail the types of trade secret information that BB Rail had and how it treated them as such. Defendants claim the alleged trade secrets are publicly available, "for example, customers for a railway line can be found merely by looking at a map of the rail line." But this disputes Plaintiff's allegations that its customer lists are not publicly available information, and the Court cannot resolve such fact disputes at the Rule 12(b)(6) phase.
Moreover, Defendants' example addresses only one of the trade secrets Plaintiff alleges, not all. Defendants argue that information an employee gains from years of experience is likewise not trade secret, but this again simply disputes Plaintiff's allegations that it had trade secrets. Giving reasonable inferences, Plaintiff's fact allegations plausibly support that Mr. Wass and Mr. Gorton obtained and took from Plaintiff not just experience and professional knowledge, but also specific information regarding Plaintiff's business that Plaintiff had maintained as trade secret.
Defendants also argue the Amended Complaint lacks plausibility that ATG used any of Plaintiff's trade secrets. It does not appear Defendants make this argument as to Mr. Wass or Mr. Gorton. Defendants recognize "Plaintiff alleges that BB Rail's Trade Secrets allowed ATG to undercut BB Rail and approach BB Rail's clients," but contend this allegation is conclusory because Plaintiff does not further explain "how the ‘trade secret information’ allegedly allowed ATG to ‘go from having no business operations in Salt Lake City and Gillette, Wyoming to opening a competing business in a matter of weeks.’ " The Court disagrees.
Plaintiff's Amended Complaint adds factual allegations to plausibly support that ATG used the trade secrets that Mr. Wass and Mr. Gorton allegedly brought with them from BB Rail. Notice pleading does not require more. While Defendants' memorandum points out factual weaknesses they perceive in Plaintiff's claim (ECF No. 22 at 17), the facts they raise are outside the Amended Complaint and dispute Plaintiff's allegations.
Accordingly, the Court finds the DTSA claim as now pleaded states a claim. Both sides agree that the elements for trade secret misappropriation under state law (Count IV) and the DTSA are the same. Accordingly, Defendants' motion is denied with respect to Counts III and IV.
B. Claim I for Breach of Duty of Loyalty Against Wass and Gorton
In Count I, Plaintiff claims Mr. Wass and Mr. Gorton each breached their duty of loyalty. Defendants argue this claim fails as a matter of law because Plaintiff does not allege that Mr. Wass or Mr. Gorton were officers, and a mere employee's duty of loyalty allows the conduct that Plaintiff alleges. Defendants cite cases standing for the proposition that employees can prepare to compete before leaving their employer, and that those preparations can lawfully include discussions with fellow employees. Defendants cite the Restatement (Second) of Agency:
[I]t is normally permissible for employees of a firm, or for some of its partners, to agree among themselves, while still employed, that they will engage in competition with that firm at the end of the period specified in their employment contracts. However, a court may find that it is a breach of a duty for a number of the key officers or employees to agree to leave their employment simultaneously and without giving the employer an opportunity to hire and train replacements.
Restatement (2nd) of Agency § 393, Comment e (in part). Defendants note that although Plaintiff alleges several employees left simultaneously, Plaintiff does not allege that the employees gave no notice or left BB Rail no opportunity to hire and train replacements.
Plaintiff responds that Mr. Wass and Mr. Gorton were "senior managers," and that their alleged breaches of loyalty go well beyond lawful preparations to compete with BB Rail. Plaintiff alleges the two were "high-level management employees of BB Rail who were responsible for BB Rail's Salt Lake City and Gillette rail infrastructure services business," the part of BB Rail's business that ATG allegedly still wanted to obtain after its negotiations with BB Rail fell through. Plaintiff alleges that in recruiting other BB Rail employees, Mr. Wass and Mr. Gorton used information confidential to BB Rail and "Wass and, upon information and belief, Gorton, ceased renewing contracts for BB Rail customers prior to leaving BB Rail, with the intent of signing them to contracts with ATG." Defendants do not cite any authorities finding such allegations fail to state a breach of an employee's duty as a matter of law. Rather, the Restatement note on which Defendants rely suggests the opposite is true:
Even before the termination of the agency, [the agent] is entitled to make arrangements to compete, except that he cannot properly use confidential information peculiar to his employer's business and acquired therein. Thus, before the end of his employment, he can properly purchase a rival business and upon termination of employment immediately
compete. He is not, however, entitled to solicit customers for such rival business before the end of his employment nor can he properly do other similar acts in direct competition with the employer's business.
The limits of proper conduct with reference to securing the services of fellow employees are not well marked. An employee is subject to liability if, before or after leaving the employment, he causes fellow employees to break their contracts with the employer. On the other hand, it is normally permissible for employees of a firm, or for some of its partners, to agree among themselves, while still employed, that they will engage in competition with the firm at the end of the period specified in their employment contracts. However, a court may find that it is a breach of duty for a number of the key officers or employees to agree to leave their employment simultaneously and without giving the employer an opportunity to hire and train replacements.
Restatement (2d) of Agency § 393, comment e (1958) (emphasis added).
As Defendants point out, the cases on which Plaintiff relies for this claim involve a greater magnitude of post-departure recruitment and more detailed facts regarding the use of confidential information. However, Mr. Wass and Mr. Gorton's alleged recruitment of employees and delay of BB Rail's customer business until after their departure does not differ in nature from the cases on which Plaintiff relies. In short, Defendants' argument regarding the breach of loyalty claim raises factual matters – particularly regarding the magnitude of said breach – that the Court cannot decide on a Rule 12(b)(6) motion. The motion to dismiss Count I is accordingly denied.
C. Claim II for Breach of Confidentiality Agreements Against Wass and Gorton
Plaintiff alleges Mr. Wass and Mr. Gorton each signed confidentiality agreements in 2006, a few years after beginning employment with BB Rail. Plaintiff claims Wass and Gorton breached their agreements by taking trade secrets and other confidential information from BB Rail and using it on behalf of their new employer, ATG. Defendants argue the agreements are unenforceable as a matter of law for lack of consideration because Wass and Gorton were already employed by BB Rail when they signed them.
Plaintiff responds that Defendants rely on a stricter legal standard applicable to non-compete agreements, to which confidentiality agreements are not subject. Plaintiff cites inter alia Preston v. Marathon Oil Co. , 2012 WY 66, ¶¶ 9-10, 277 P.3d 81 (Wyo. 2012). At issue in that case was an employee's agreement to assign to his employer any intellectual property he developed during employment. The agreement was entered after the at-will employment began, albeit only a month or less later. The court answered a certified question from the Federal Circuit on whether such an assignment agreement requires additional consideration beyond just the continuation of at-will employment. In holding that such an agreement did not require additional consideration, the court expressly noted that employees' non-compete agreements are disfavored as restraints of trade and thus held to a stricter standard than other types of employer-employee agreements.
We agree that there is a fundamental difference between non-competition agreements and intellectual property assignment agreements. The concerns with restraints on trade which attend non-competition agreements simply are
not present for intellectual property assignment agreements. .... Given that the intellectual property assignment agreement did not affect Mr. Preston's right to earn a living or otherwise impose an improper restraint on trade, Hopper [v. All Pet Animal Clinic, Inc. , 861 P.2d 531 (Wyo. 1993) ] does not govern our decision in this case.
Preston v. Marathon Oil Co. , 2012 WY 66, ¶ 20, 277 P.3d 81, 87 (Wyo. 2012).
Defendants meanwhile cite Brodie v. General Chemical Corp. , 934 P.2d 1263, 1268 (Wyo. 1997) and Brodie v. General Chemical Corp. , 112 F.3d 440, 442-444 (10th Cir. 1997) for the proposition that an employer must provide additional consideration for agreements entered after employment begins. However, Brodie so held only as to contracts that "restore at-will" employment. Defendants recognize that their employment with BB Rail was always at-will. ECF No. 22 at 6 (citing Amended Complaint ¶¶ 38, 55). The confidentiality agreements (attached to the Amended Complaint) also recognize that Mr. Wass and Mr. Gorton's respective employment was at-will. ECF Nos. 20-2, 20-3 ¶ 8.
Defendants have not shown the breach of confidentiality agreement claim fails as a matter of law against Mr. Wass or Mr. Gorton, and Defendants' motion is denied with respect to Claim II.
D. Claim V for Tortious Misappropriation and Claim VII for Civil Conspiracy
In their memorandum, Defendants argued Claim V for "tortious misappropriation" was preempted by the statutes governing misappropriation of trade secrets. The claim alleges:
ATG underwent a systematic process, through improper means, of taking BB Rail's Salt Lake City and Gillette business, including clients, vendors, and contracts; its highly sensitive business information; and its employees, from top level management all the way through laborers and secretaries.
* * *
BB Rail had a valid economic expectancy that its employees would act in ways that benefit BB Rail, would not act to BB Rail's detriment, and that its competitors would deal with it in good faith.
ATG misappropriated and used, in competition with BB Rail, a unique pecuniary interest created by BB Rail through the expenditure of labor, skill and money.
Specifically, by working with Wass and Gorton for the collective departure of their subordinates, to effectuate the broader scheme of having ATG effectively take BB Rail's business, including its employees, customers and vendors, ATG, Wass and Gorton sought to put ATG in the position of an entity that had spent the time and money to develop that business, while putting BB Rail effectively in the position of a start-up in the Gillette and Salt Lake City markets.
ATG, Wass and Gorton's conduct was unscrupulous, and it offends public policy and established concepts of fairness.
Amended Complaint ¶¶ 15, 94-97.
Plaintiff's response points out that this claim alleges Defendants wrongfully took BB Rail's Salt Lake City and Gillette business in whole cloth, as distinguished from its trade secrets. Plaintiff cites two cases: SRS Acquiom Inc. v. PNC Fin. Servs. Grp., Inc. , No. 1:19-cv-02005-DDD-SKC, 2020 WL 3250186 at *4, 2020 U.S. Dist. LEXIS 107097 at *11-12 (D. Colo. Mar. 26, 2020) and Satcom Sol. & Res. LLC v. Pope , No. 19-cv-02104-CMA-GPG, 2020 WL 4511773 at *11-12, 2020 U.S. Dist. LEXIS 80894 at *33 (D. Colo Apr. 17, 2020), rec. adopted in 2020 WL 2188922 (D. Colo. May 6, 2020). SRS Acquiom discusses a claim for intentional interference with prospective economic advantage under Colorado law. 2020 WL 3250186 at *3. Satcom discusses a claim for civil theft under a Colorado statute. 2020 WL 4511773 at *11-12.
Defendants reply that Wyoming does not recognize tortious misappropriation as a tort, and the Court therefore should dismiss Claim V. Defendant further argues that because Plaintiff recognizes its civil conspiracy claim (Claim VII) hinges on Claim V as the underlying tort, the Court should also dismiss Claim VII.
Plaintiff's "tortious misappropriation" theory has been recognized in other jurisdictions in relatively narrow factual circumstances. See, e.g., Heller v. Lexton-Ancira Real Estate Fund, Ltd. , 809 P.2d 1016, 1021 (Colo. Ct. App. 1990), rev'd on other grounds , 826 P.2d 819 (Colo. 1992) ("unfair misappropriation"); SGS Acquisition Co. Ltd. v. Linsley , 352 F. Supp. 3d 1109, 1123 n.10 (D. Colo. 2018) (impliedly restricting misappropriation to Heller's facts, "a years-long ‘repeat player’ relationship, in which one of the parties ceased doing business with the other and effectively coopted i[t]s business model that had been developed over many years of working together.").
Although Defendants argue Wyoming does not recognize misappropriation of business value as a tort, Defendants do not point to a case in which the Wyoming Supreme Court has considered and rejected such a claim. Wyoming adopted the "common law of England, as modified by judicial decisions," to the extent it is not overwritten by statutes. Wyo. Stat. Ann. § 8-1-101.
Although the common law is inseparably identified with the decisions of the courts, ... [it] is not limited to published judicial precedent, but includes the entire wealth of received tradition and usage, fundamental principles, modes of reasoning, and the substance of its rules as illustrated by the reasons on which they are based, rather than the mere words in which they are expressed.
Briefing.com v. Jones , 2006 WY 16, P11-P14, 126 P.3d 928, 934-936 (Wyo. 2006) (quoting 15A Am. Jur. 2d Common Law § 1 (2000) ). "[T]he common law is not a set code of law, static and unchanging. ... In holding to this principle, this Court has repeatedly recognized the dynamic nature of the common law." Id. at 935. Hence Defendants in effect ask the Court to conclude – without thorough briefing of the issue by either side – that if faced with a claim for misappropriation of business values, the Wyoming Supreme Court would not recognize it as a tort. The Court however concludes it is unnecessary to reach that question at present.
In citing SRS Acquiom , Plaintiff relies on a theory of tortious interference with prospective economic advantage. Wyoming clearly recognizes the latter as a tort. See, e.g., Wilder v. Cody Country Chamber of Commerce , 868 P.2d 211, 225 (Wyo. 1994) (citing Restatement (2d) of Torts §§ 766B, 768 ). The legal theory stated in the Amended Complaint for Claim V is not dispositive of whether it states a claim for relief. "Federal pleading rules call for "a short and plain statement of the claim showing that the pleader is entitled to relief," Fed. Rule Civ. Proc. 8(a)(2) ; they do not countenance dismissal of a complaint for imperfect statement of the legal theory supporting the claim asserted." Johnson v. City of Shelby, Miss. , 574 U.S. 10, 11, 135 S.Ct. 346, 190 L.Ed.2d 309 (2014).
Plaintiff's response brief also indicates in passing that Claim V is a claim for civil theft (ECF No. 23 at 23), but Plaintiff does not cite Wyoming legal authority for such a claim, particularly regarding intangible business values. The Court does not reach the question of whether Wyoming recognizes such a claim.
Here, the fact allegations in Claim V give Defendants notice of the alleged conduct at issue. In their reply, Defendants do not argue Plaintiff's reliance on SRS Acquiom was inappropriate beyond the fact that the case applies Colorado, not Wyoming, law. In the Court's brief review, it appears the Amended Complaint's fact allegations for Claim V plausibly state a claim for tortious interference with prospective economic advantage under Wyoming law. See, e.g., Wilder , 868 P.2d at 225. "Having informed the [defendant] of the factual basis for their complaint, [plaintiffs] were required to do no more to stave off threshold dismissal for want of an adequate statement of their claim." Johnson , 574 U.S. at 12, 135 S.Ct. 346 (citing Fed. Rules Civ. Proc. 8(a)(2) and (3), (d)(1), (e) ). Defendants have not shown that Claim V fails as a matter of law, and the Court denies the motion to dismiss that claim. Because the tort claim supports the underlying tort element for a civil conspiracy, the Court also denies Defendants' motion to dismiss the civil conspiracy claim (Claim VII).
E. Claim VI for Breach of Contract Against ATG
In Claim VI, Plaintiff alleges in relevant part that in July 2017 its former controller left BB Rail to join ATG in the same or similar role. ATG at that time "had no railroad construction and maintenance business in Salt Lake City, Utah or Gillette, Wyoming." Amended Complaint ¶ 12. Around November 2017, representatives of ATG including BB Rail's former controller "began discussions with BB Rail regarding the possibility of a sale of part of BB Rail to ATG. Specifically, ATG was interested in acquiring part of BB Rail's business, including the business out of Salt Lake City and Gillette." Id. ¶ 13.
In connection with discussions of a possible sale, the parties executed a Non-Disclosure Agreement, dated November 2017, a copy of which is attached as Exhibit A. The Non-Disclosure Agreement included, among other things, a provision prohibiting either company from soliciting, recruiting or attempting to hire current or former employees of the other company.
Once it appeared to ATG that a sale of part of BB Rail to ATG was unlikely, ATG underwent a systematic process, through improper means, of taking BB Rail's Salt Lake City and Gillette business.
* * *
ATG had a contractual obligation to BB Rail under the November 2017 Non-Disclosure Agreement.
Under the Non-Disclosure agreement, neither party could solicit, recruit or otherwise attempt to hire an employee of the other party. Specifically, the Non-Disclosure Agreement states that: "(e)ach party agrees that, for a period of one year from the date this NDA is executed, it shall not engage in, either directly or indirectly, the solicitation, recruitment or otherwise attempt to hire as an employee, consultant or independent contractor any employee of the other party."
ATG recruited and hired at least 66 BB Rail Employees in violation of the Non-Disclosure Agreement.
ATG spread false rumors to BB Rail's clients in Salt Lake City and Gillette that BB Rail was closing this specific part of its rail business.
Amended Complaint ¶¶ 14, 15, 100-103. The Non-Disclosure Agreement is attached to the pleading. ECF No. 20-1.
ATG first argues the Non-Disclosure Agreement is unenforceable for lack of consideration because Plaintiff does not allege BB Rail actually provided any confidential information to ATG. In the third "whereas" clause, the contract states "in exchange of the mutual covenants contained herein and other good and valuable consideration, the adequacy of which is hereby recognized, the parties agree to be bound by the following." ECF No. 20-1 at 1. Consistent with that provision, Plaintiff responds that the consideration for the Non-Disclosure Agreement is the mutual promises to forego recruiting each other's employees for one year.
The Non-Disclosure Agreement provides that it "shall be interpreted in accordance with the laws of the State of Delaware and any action shall be brought in its State or Federal Courts," but both sides assume Wyoming law governs this claim. The Court will do likewise.
Even if the Court were to consider this claim under Delaware law sua sponte, Delaware's law regarding contractual consideration is similar to Wyoming's. See, e.g., Haft v. Dart Grp. Corp. , 841 F. Supp. 549, 573 (D. Del. 1993) (citing Affiliated Enters., Inc. v. Waller , 5 A.2d 257, 259 (Del. Super. Ct. 1939) ; First Mortg. Co. v. Fed. Leasing Corp. , 456 A.2d 794, 795–96 (Del. 1982) (holding "[c]onsideration can consist of either a benefit to the promisor or a detriment to the promisee")).
The basic elements of a contract are offer, acceptance and consideration. A generally accepted definition of consideration is that a legal detriment has been bargained for and exchanged for a promise. A sufficient legal detriment is the promise or performance of any act, regardless of how slight or inconvenient, which [the promisee] is not obligated to promise or perform so long as it does so at the request of the promisor and in exchange for the promise. By the same token, the term ‘benefit’ means the receiving as the exchange for a promise some performance or forbearance which the promisor was not previously entitled to receive. Id. Thus, [v]aluable consideration ... may consist of an exchange of mutual promises, which promises impose a legal liability upon each promisor. [W]e have long held that absent fraud or unconscionability, we will not look into the adequacy of consideration.
Mantle v. N. Star Energy & Constr. LLC , 2019 WY 29, 437 P.3d 758, 784 (Wyo. 2019) (citations and quotation marks omitted). The Court agrees with Plaintiff that its allegation (in the Non-Disclosure Agreement attached to the Amended Complaint) of the parties' mutual promises to not recruit each other's employees for one year, as imposing a legal liability upon each promisor, plausibly supports the consideration element for the Non-Disclosure Agreement.
ATG next argues the claim fails because Plaintiff does not allege that ATG recruited all 66 former employees of BB Rail, as opposed to those employees approaching ATG for employment without ATG's solicitation. But Plaintiff does allege that "ATG recruited and hired at least 66 BB Rail Employees in violation of the Non-Disclosure Agreement." Amended Complaint ¶ 102. ATG further notes the contract only prohibits recruitment for one year from the contract's execution, and Plaintiff does not specifically allege that all of the 66 hirings occurred within that prohibited time period. However, Plaintiff alleges that ATG knew, should have known, directed or acquiesced in at least Wass recruiting at least two BB Rail employees by May 2018. Amended Complaint ¶¶ 46-50. These allegations plausibly support the claim; the question of how many of the other 60+ hirings occurred at BB Rail's recruitment during the prohibited time period is a factual issue for discovery, not a pleading requirement. Third and finally, ATG argues in a footnote that the portion of this claim asserting it spread false rumors that BB Rail was discontinuing operations in Salt Lake City and Gillette, even if true, would not constitute a breach of the Non-Disclosure Agreement. Plaintiff does not appear to respond to this argument. The Non-Disclosure Agreement includes within the definition of protected confidential information "information conveying or regarding proposed business, [and] the relationship of the parties hereto." Plaintiff alleges the relationship between BB Rail and ATG was of a company potentially interested in selling its business in Salt Lake City and Gillette, and a potential buyer of that business. The first and second "whereas" clauses recognize the "sensitive nature" of the "contemplated exchange" of information in "furtherance of a possible restructuring or change in ownership of the Rail Services business of BBII." It is a factual issue whether ATG's alleged spreading of "false rumors to BB Rail's clients in Salt Lake City and Gillette that BB Rail was closing this specific part of its rail business" constitutes a breach of ATG's promise not to disclose "information conveying or regarding proposed business," or its relationship with BB Rail.
Accordingly, the Court denies the motion to dismiss Count VI.
IV. Conclusion
For each of the foregoing reasons, Defendants' motion to dismiss is DENIED.
IT IS SO ORDERED this 16th day of October, 2020.