Tortious Interference with Contractual Relations Misappropriation of Trade Secrets and Confidential Information Unfair Competition Conversion
E. Frank Hopkins Seafood, Co., Inc. v. Olizi, PICS Case No. 17-1116 (E.D. Pa. June 15, 2017) Joyner, J. (31 pages).
Defendants moved to dismiss plaintiff's claims of tortious interference with contractual relations, misappropriation of trade secrets, unfair competition, conversion, and civil conspiracy based on plaintiff's former employee setting up his own business and soliciting plaintiff's customers using confidential information he obtained while working for plaintiff. Motion dismissed.
Plaintiff wholesale seafood distributor alleged that former employee used confidential information to entice plaintiff's existing and potential customers to contract with company employee set up. Plaintiff asserted tortious interference with contractual relations and prospective and business relationships, misappropriation of trade secrets, unfair competition, conversion, and civil conspiracy. Defendants moved to dismiss.
Plaintiff sufficiently pled the existence of contractual relations where its complaint alleged that it maintained a list of current and prospective customers, that a number of those customers had terminated their contracts and were contracting with defendant instead and that defendant solicited plaintiff's two largest customers. Those allegations established a reasonable expectation that discovery would reveal evidence of contractual relations. Plaintiffs also sufficiently pleaded that defendant's interference was unjustified by asserting that defendants took and used confidential information to induce plaintiff's customers to break their contracts with plaintiff. Plaintiff also pleaded losses that exceeded $75,000.
Plaintiff sufficiently pleaded that its customer lists were confidential and that former employee had access to the information in order to perform his duties, that he was aware of the confidential nature of the information and that defendants used the information without plaintiff's consent. Defendants did not contest the existence and breach of a duty of secrecy.
Defendants contended that PUTSA pre-empted the common-law unfair competition tort claim brought by plaintiff. However, plaintiff alleged that defendants engaged in unfair competition by misappropriating confidential information as well as trade secrets and defendants' motion to dismiss was denied in accordance with Advanced Fluid Sys., Inc. v. Huber, 28 F. Supp. 3d 306. Defendants also argued that plaintiff's conversion claim was pre-empted by PUTSA. While plaintiff's claim could be preempted as to the converted trade secrets, plaintiff also alleged conversion of confidential information which was not preempted.